The Future of Premium AVOD Growth in Asia
November 29, 2022 | 7 min read
As the hunger for on-demand content continues to grow, ad-supported viewership has accelerated across Asia. At AVIA’s Indonesia in View and Asia Video Summit, Magnite’s Asia Managing Director, Gavin Buxton, sat down with industry experts from The Trade Desk, WeTV iflix and iQIYI to discuss the future of the premium advertising video-on-demand (AVOD) model and why advertisers should embrace new opportunities.
The AVOD way forward
A pure SVOD model has proven unsustainable in achieving scale, and global players like Netflix have shifted to ad-supported streaming.
At AVIA’s Indonesia in View, Florencia Eka, The Trade Desk Indonesia’s country manager, highlighted that streaming platforms will be ad-funded primarily because “the market for new subscribers is so competitive, with high costs and subscription fatigue.”
In Asia, consumers have a long-standing preference for free content. “FTA has always been a dominant part in Asia, unlike the US where broadband cable is mainstream,” said Magnite Asia’s Managing Director, Gavin Buxton. “Global players have realized that they need an ad-lite model to scale. Consumers see the value exchange for ads with lower or no fee. In Asia, the majority accept ads.”
This is especially reflected across WeTV iflix’s AVOD growth in Indonesia. “AVOD subscription remains the highest in Indonesia,” said Lesley Simpson, WeTV iflix Indonesia’s country manager. “This especially caters to the needs of Gen Zers who are so used to having free content and a premium viewing experience.”
Premium content for premium advertising
In advertising, OTT’s premium environment distinguishes itself from social and user-generated content (UGC) platforms. AVIA’s research on Premium OTT revealed consumers highly valued OTT in Singapore for having the highest quality content. 58% of those surveyed indicated that they felt premium OTT services had high-quality content, compared to only 36% for social media and video sharing services. Similarly, when asked which video services they generally felt captured the highest levels of attention while watching, 49% of respondents selected OTT streaming services, compared to only 35% who chose social media and video sharing services.
Levels of engagement were also entirely different, with 51% of people feeling immersed when watching OTT content as opposed to only 39% for social media & video sharing. Top emotions elicited when watching OTT were happiness and amusement, whereas, for social media and video sharing, the top feeling was “nothing.”
Rajesh Sheshadri, The Trade Desk Southeast Asia’s general manager, highlighted at AVIA’s Asia Video Summit that the best way to distinguish OTT is the impact of TV it brings “with high-quality content and amazing storytelling but with the precision of digital.”
Advertisers are taking notice as OTT players continue to grow their pool of premium content and audiences.
“OTT is not the mainstream media platform yet, but advertisers are looking into OTT and getting interest and traction,” said Elaine Tan, iQiyi International’s Southeast Asia head of sales. “OTT services invest in premium content, which users and brands appreciate. Advertisers value OTT’s brand-safe environment compared to other platforms like Youtube.”
Furthermore, advertisers across all verticals, not just luxury brands, stand to benefit from advertising on OTT’s premium platform. “OTT has room for all types of advertisers, not just advertisers with high brand campaigns,” said Eka. “There’s something for everyone on OTT – 9 in 10 Indonesians think OTT is an important channel to watch sports content, and Gen Zers say OTT is where they will watch their favorite shows.”
Users also associate brands they see on OTT as more premium than UGC, Eka added.
In addition to premium content, a high-quality ad experience is key for AVOD platforms to retain viewers. “If you have two OTT platforms and one has a better ad experience, it makes a difference,” said Buxton, adding that this is where ad podding and ad breaks are key to enable relevance and a better ad experience.
OTT’s slow budget shift
Despite AVOD’s promising growth and streaming’s premium benefits, advertising spend has yet to reach the same level of development. Experts agree that OTT has been under-indexed compared to social and UGC platforms.
The slow transition of budgets from linear to digital is a reason for the lack of advertising growth. “TV still has a fair share of the money,” said Sheshadri. “When you look at digital, OTT is not a significant part of digital buy, and linear is a different line item.”
“The US and EMEA are getting closer where more investment goes into streaming, and it’s a fixed line item,” said Buxton. “In Asia, while investment has increased, there’s room to grow.”
Lack of awareness and ease of activation are other notable challenges shifting spends to OTT. “There’s a huge demand for OTT supply,” said iQIYI’’s Tan. “We need to do more to advocate OTT buying and the value we add to the media mix.” She also noted that media planners often have to work with a brand’s pre-allocated budget split, which further increases the difficult budget shift to OTT.
“While Youtube has a place, not all consumers are not spending time on one single platform,” said Sheshadri. “More education is needed.”
Despite OTT’s sufficient scale, it is worth noting that YouTube and social had a headstart with key advertising players on board. “OTT has not had the same size and scale in advertising as Netflix, the biggest OTT player, did not have advertising to date,” said Eka.
Activating live linear and sports inventory is another area potentially pushing OTT scale further. “The sleeping giant is digital ad replacement,” added Buxton. “Linear viewing and live sports are watched, but ads are not turned on, and it’s a wasted opportunity. Growth opportunities are there to take scale further.”
Scaling with programmatic
Fortunately, programmatic offers the solution to fragmentation and greater scale in the OTT space. While traditional sales remain important, more publishers have embraced programmatic sales.
“Even if there’s a lot of providers, fragmentation is not a problem as it can be easily enabled through programmatic,” said Buxton. “Publishers have been embracing programmatic, and the digital benefits and audience enablement opportunities are clear.”
Unlike FTA advertising, where prime time ad slots require heavy investment, programmatic advertising makes getting in front of a premium audience more affordable and measurable. “With programmatic, it’s a totally different game – you can pay for the number of impressions and measure everything,” said WeTV iflix’s Simpson.
Yet, for programmatic to take off, publishers need to enable better competition across direct and programmatic buys. This allows programmatic buyers an equal opportunity to compete for premium video supply.
“In the US, 80% of premium video buys are done through programmatic, and premium brands see the effectiveness,” said Buxton. “Enabling programmatic to compete better with direct-sold campaigns is something that has evolved in the US and EMEA through technology advancement enabling unified ad decisioning, and its adoption is not at that level yet in Asia.”
Collaboration across players in the ecosystem is crucial to advancing Asia’s programmatic landscape.
“Inventories are often sold in a bundle which often comes with non-programmatic elements such as article sponsorship and events,” said Eka. ”The key is working with publishers to make that more seamless.”
Magnite’s Buxton added that OTT partners can’t do it alone – collaboration is needed for additional brand and audience layering, enabling programmatic to work best.